SCO On the Rocks

Netromancer wrote in to alert us to a Businessweek Online article discussing the downward spiral in SCO's fortunes and luck. From the article: "The mouse that roared is barely squeaking these days. A string of recent setbacks raises grave questions about SCO's finances, its court case, and its management."

Comments

Whoa

[LFS.Morpheus]

Didn't see that coming. Who would have thought that basing a company on litigation, scare tactics, and spreading FUD wouldn't work?

Re:Whoa

[stephenisu]

There is is nothing immoral about suing a large corporation. Now, suing them for something unfounded costing taxpayer money while simultaniously raising costs that get passed to the consumer, THAT is immoral.

I still feel kinda bad for the SCO employees who had nothing to do with the litigation and have faced an extra hard time getting employment after leaving because "They were there".

Re:Whoa

[hhlost]

Who would have thought that basing a company on litigation, scare tactics, and spreading FUD wouldn't work?

I agree. They can't be so stupid not to understand that the courts would eventually figure out what they're doing and put an end to this. In my experience, judges are very down-to-earth people and really frown upon people/organizations who are trying to take advantage of the system. Of course, it seems that SCO & friends knew that it would take a ton of time and money to demonstrate to the non-technical folks (e.g. judges, corporate execs.) that their case is frivolous, and that the news of a lawsuit against Linux would strike fear in the hearts of corporate execs, whose job security depends on their ability to make decisions that help the company in the long run.

In that sense, SCO succeeded in buying (a) commercial OS maker(s) some time to fix their (its) flawed products. I take pleasure in the fact that it doesn't seem to have been enough time... I recently talked with an exec at a company that just switched to Linux and they're saving over $1 million annually! As long as Linux works for them---and it does---why wouldn't they make the switch. It's simple business. That's what has the big OS companies (company) shaking in their (its) penny loafers.

Re:Whoa

[TokyoBoy]

I used to work as an engineer on the Caldera server and desktop teams. I was part of the many layoffs which reduced the engineering forces there to nothing. It was sas seeing friends go and everyone knew it was only a matter of time before it was their turn.

However, also being a founding trustee memeber of the Salt Lake Linux Users Group and a Linux and OpenSource advocate for years, I am very grateful that I was able to leave before the name change to SCO and the "direction change" - I would have had to quit anyway.

I still have a couple friends there. The amazing thing is that I ran into one of them (Walt Hammond) yesterday (Fri. March 4, 2005) at lunch. I was amazed at his comments. The feeling inside the company is very positive! I couldn't beleive it. It seems that (from my stand point) that the co-workers are completely blind to what is really happening. Not only with reguard to what is happening but also related to the morality (or lack thereof IMO) of their actions. He was completely positive saying that (parapharasing) "things looks so good for us right now but if you read the press, you'd think we were a sinking ship" and (again, paraphrasing) "the press says we've had major set backs but if you look, we've been winning".

I don't know if it's the blind leading the blind or if he really believes what he told me. Of course, being at the director level or above, I'd think you'd have to tote the company line or you wouldn't be around very long at SCO. So, who knows what he really believes.

Re:Whoa

[jbolden]

Nothing has been tested in court, that's what the judge means by "not a single disputed fact". However a great deal has been semi-tested in that SCO couldn't find anything:

1) The origins of Linux pan out
2) The multi-processor stuff that Alan Cox put in Linux came from where he says it did
3) Unix is solely a trademark
4) There isn't any SCO code in Linux.

Still to be tested will be SCO's theory of law
5) Free copyright licenses that encourage cooperation but not commerce have full force of law.

Re:Whoa

[timeOday]

Second, I doubt that SCO's outcome will adversely any non-manager employee.

Do you suppose it will hurt the executive officers? They're famous now! Check out Carly Fiorina who lead HP to a 50% reduction in value. They paid her 45 million just to go away, prompting an immediate 7% spike in HP stock. Her punishment? Serious consideration for the job of World Bank President!

Once you've "in," nothing matters anymore. In extreme cases you might get fired and be forced to retire in luxury.

Re:Whoa

[cgenman]

From the article:

McBride says that while his staff is small in numbers, it's high on engineering expertise.

Apparently his staff is high on something.

Re:Whoa

[blippy]

Or how about the case of Marconi, in the UK. It was run successfully by Lord Weinstock for years. The company had a large cash balance, but he was ousted by City-friendly management who then went on a high-tech spending spree in the late 90's. And we all know what happened to the tech industry come the turn of the century.

Result? The whole company gets flushed down the toilet, shareholders loose money, and normal employees loose their jobs. The directors, who's decisions led to this disaster in the first place, walk away with Big Cash Prizes.

Ugly face of capitalism, or what?

Perhaps

[Anonymous Coward]

Perhaps SCO can sue itself to raise cash

Re:Perhaps

[AndroidCat]

Darl sued his last employer, so why not?

Re:Perhaps

[Anonymous Coward]

Darl has a history of litigation. He's sued THREE of his employers, has taken legal action against one of his kid's schools, sued 2 financial advisors and one of his wives is involved in 2 lawsuits against neighbours.

It's a bit like the social situation where generations of families become dependent on welfare, and as it's all they know it's all they continue doing. With Darl, it's litigation.

What? SCO needs money?

[DrEldarion]

Surely there must be someone else they can sue.

well..

[Anonymous Coward]

> Who would have thought that basing a company on litigation,
> scare tactics, and spreading FUD wouldn't work?

Microsoft?

Another Dot Com Failure

[fm6]

So litigation isn't a reliable business model either. We're doomed!

The sad thing is

[argoff]

... isn't all the peoples lives who have been interrupted because of the lawsuit, but all the people who bought the propaganda that SCO was enterprise "material" back in the 90's while blowing off Linux.

Has anyone managed to short SCO stock?

[defile]

I've been trying since they were nearly $20/share but my broker said something about it not being available. Did Wall Street see them as being full of shit, too?

Re:Has anyone managed to short SCO stock?

[Anonymous Coward]

In order for you to sell a stock short, your broker has to find someone who owns it and is willing to lend it to you. After all, whoever buys it from you is expecting to take delivery of the stock, and you don't have it to deliver.

Nowadays, most stock is held in so-called "street name": the owner doesn't actually hold certificates but rather leaves it in his broker's name. Stock held this way is available for borrowing. For example, every brokerage firm has *some* customer who is long, say, MSFT but has left it in street name; if you want to short MSFT, the firm can borrow the stock from that customer. (That right to borrow your stock is explicitly written into the terms and conditions of brokerage accounts.)

Stocks in a death spiral, such as SCOX / SCOXE, are often hard to locate for borrowing and subsequent short selling. Under such circumstances, the prices of put options (the right but not the obligation to sell the stock at a specified price until a specified date) can and do go through the roof.

Incidentally, the money to be made shorting SCOX / SCOXE has already been made. There's not much more room left for the stock to go down.

Everyone knew it would happen..

[ElScorcho]

..especially the management at SCO. You think they're upset about this? It was obvious from the very beginning that they didn't have the long term benefit of the company in mind when they started all this garbage. The people in charge of SCO, like so many other dead corps of the past, don't care what happens to the company. If you think they haven't gotten fabulously rich while all this has been going on you're deluding yourself.

At this point they're probably running company affairs from their yachts, and when it implodes, so what? Won't hurt them at all, and in a year or two they'll be hired on by some other group of corporate leeches and they'll drain another company dry.

It's just a shame that in this case it impacts more than just the poor slobs working at the company in question (of course, if they're STILL there after all this they deserve it) but something that millions all over the globe care about. But, hey, it was good for business- after all no publicity is bad publicity, right?

Re:Everyone knew it would happen..

[defile]

At this point they're probably running company affairs from their yachts, and when it implodes, so what? Won't hurt them at all, and in a year or two they'll be hired on by some other group of corporate leeches and they'll drain another company dry.

If I were dumb enough to hold SCO stock until the bitter end, I would be pretty embarassed, and litigious.

Don't the execs face severe legal punishment for this?

SCO on IRC

[Anonymous Coward]

Topic in #os: hey guyz, stop pickin on irix.
<SCO> w00t! i bought unix! im gonna b so rich!
<novell> /msg atnt haha. idiot.
<novell> whoops. was that out loud?
<atnt> rotfl
<ibm> lol
<SCO> why r u laffin at me?
<novell> dude, unix is so 10 years ago. linux is in now.
<SCO> wtf?
<SCO> hey guyz, i bought caldera, I have linux now.
<red_hat> haha, your linux sucks.
<novell> lol
<atnt> lol
<ibm> lol
<SCO> no wayz, i will sell more linux than u!
<ibm> your linux sucks, you should look at SuSE
<SuSE> Ja. Wir bilden gutes Linux f&#252;r IBM.
<SCO> can we do linux with you?
<SuSE> Ich bin nicht sicher...
<ibm> *cough*
<SuSE> Gut lassen Sie uns vereinigen.
* SuSE is now SuSE[UL]
* SCO is now caldera[UL]
<turbolinux> can we play?
<conectiva> we're bored... we'll go too.
<ibm> sure!
* turbolinux is now turbolinux[UL]
* conectiva is now conectiva[UL]
<ibm> redhat: you should join!
<SuSE[UL]> Ja! Wir sind vereinigtes Linux. Widerstand ist vergeblich.
<red_hat> haha. no.
<red_hat> lamers.
<ibm> what about you debian?
<debian> we'll discuss it and let you know in 5 years.
<caldera[UL]> no one wants my linux!
<turbolinux[UL]> i got owned.
<caldera[UL]> u all tricked me. linux is lame.
* caldera[UL] is now known as SCO
<SCO> i'm going back to unix.
<SGI> yeah! want to do unix with me?
<SCO> haha. no. lamer.
<novell> lol
<ibm> snap!
<SGI> :~(
<SCO> hey, u shut up. im gonna sue u ibm.
<ibm> wtf?
<SCO> yea, you stole all the good stuff from unix.
<red_hat> lol
<SuSE[UL]> heraus laut lachen
<ibm> lol
<SCO> shutup. i'm gonna email all your friends and tell them you suck.
<ibm> go ahead. baby.
<SCO> andandand... i revoke your unix! how do you like that?
<ibm> oh no, you didn't. AIX is forever.
<novell> actually, we still own unix, you can't do that.
<SCO> wtf? we bought it from u.
<novell> whoops. our bad.
<SCO> i own u. haha
<SCO> ibm: give me all your AIX now!
<ibm> whatever. lamer.
* ibm sets mode +b SCO!*@*
* SCO has been kicked from #os (own this.)

IBM guerilla marketing reloads

[rifftide]

Word is that IBM will attempt to push the envelope with yet another guerrilla Linux PR campaign starting next month, replacing its current campaign, code-named "SCO", which appears to be running out of steam.

The SCO campaign, featuring a struggling UNIX vendor that was taken over by greedy executives claiming IP ownership of the entire GNU/Linux code base, was a stunning success. Major news sites such as those run by the Open Source Technology Group eagerly signed up to perpetrate the tongue-in-cheek hoax, which one editor called "the longest running April Fool's joke in the technology business".

Prior to SCO, IBM's PR experts tried hiring teams of college students to spray-paint logos and slogans on the sidewalks of San Francisco and Chicago. That campaign was acknowledged to be a flop.

I preferred them between a rock and hard place

[Anthony Boyd]

What once looked like a mortal threat to Linux appears to be fading. As a result, the suit has become a nonfactor in corporate buying decisions.

Yeah, but... but... I want them to flame out in a huge court loss. I want SCO's finances and future prospects to be devastated. I want a clear and definitive signal that Linux is safe and SCO was stupid to butt heads with Open Source.

This whole "fading" thing sounds like it just leaves too many doors open for other stupid companies to do bad things, because there is no jarring precedent burned into people's minds.

Thanks to heavy cost-cutting, SCO's core Unix-server-software business is generating an operating profit now and will continue to do so in 2005, he says.

Translation: "We pretty much fired everyone except for the accountant. After all, who needs developers on staff when the OSS guys work for free? Right?"

Re:uh huh..

[superpulpsicle]

Yeah management jobs are always a win-win situation in the U.S.

1.) They can do a good job and get paid x number of dollars.

2.) They do a bad job and get axed. But rewarded with a massive severance package.

It's unfair in every way to the share holders.

Why is it still in court?

[JPriest]

But considering the length of time this has dragged on, the 900 million lines of code provided to them, and the fact that there has not been a single shred of evidence to date, why is this even still in court? How much money do you suppose this has cost IBM and tax payers so far?

Doesn't the court have some basic responsibility to IBM to end this case now that SCO has come up short?

Re:Why is it still in court?

[k98sven]

But considering the length of time this has dragged on, the 900 million lines of code provided to them, and the fact that there has not been a single shred of evidence to date, why is this even still in court? How much money do you suppose this has cost IBM and tax payers so far?

Why is this still in court? Well, in part because the US legal system works at this speed. The average copyright case from filing to verdict is 2 years. And this is a larger-than average case.

It looks like this one will be resolved in 3-3.5 years.

SCO has a big pile of claims. IBM has a big pile of counterclaims. It's not just a question of the copyrights. SCO has contract claims too, IBM has licensing, trademark-infringement and patent counterclaims. And then there's the fact there's is a lot of code involved, with a lot of history behind it.

Add to that the fact that SCO has indeed been dragging their feet, and consistently been requesting more discovery.

Doesn't the court have some basic responsibility to IBM to end this case now that SCO has come up short?

That would be true if SCO had come up short. But in reality, the court hasn't determined that SCO has come up short. Yet. IBM filed for summary judgement and it was not granted. The case is still in discovery, and the court obviously felt it was more important to give SCO a long leash to produce anything it can during discovery, than it was to give IBM a quick trial.

Now, normally you would think SCO would put everything they had on the table in order to defeat the motion for summary judgement. They probably did, too, but the court decided to give them the benefit of the doubt and told IBM they could re-file their motion after the discovery phase is over. (When the court is certain it has all evidence in front of it)

FUD in the article

[Anonymous Coward]

While short on business, SCO held some potentially powerful copyrights.
The author treats SCO's ownership claims as gospel, but that has not been established in court. Novell has contested SCO's copyright ownership, a matter which is still in court. IBM has counter-sued SCO for copyright infringement and patent infringement. BSDi settled a suit against former Unix(r) owner USL which established that BSDi owned the major part of the unix(generic) copyrights, while USL held copyright on but a tiny historical remnant of the code base. SCO has a long way to go before they can be said to "hold" valid copyrights to any code that's still in use.

Nothing to fall back on, either

[theonetruekeebler]

Here we see what happens to companies with nasty and unsustainable business models:

Instead of building a good product, they tried to steal an existing one. Instead of getting ahead in the market with innovation, they sued their competitors and many potential allies. Instead of building a loyal client base, they sued their own customers.

They sued their own customers! And they sued their ex-customers. Who would do business with a company like that? Their customers are fleeing in droves. Their vendors and resellers are dropping them for what they are. Nobody trusts them. And since nobody has to do business with them, nobody will.

And at the risk of saying what's already been said: Good riddance.

At least put a link to the original of this

[iONiUM]

It's a bash quote in case you didn't already know.

I wrote a letter to the article's author

[shadow255]

I'd mod you up, but I thought it might be better to share the letter I just wrote to the author/editor instead. I took exception to the entire paragraph you quoted.

To: spencer_ante@businessweek.com
Date: Sat, 5 Mar 2005 12:32:48 -0800
Subject: Article "A Linux Nemesis on the Rocks"

I read with interest your article concerning the legal battle waged by the SCO Group against IBM. While your opening paragraph paints with somewhat of a broader brush than is perhaps warranted for the present-day operating systems software landscape, it is further in that I question your grasp of the facts.

You write, "While short on business, SCO held some potentially powerful copyrights." I think it is either dishonest of you to state this, or you are genuinely unaware that there is substantial doubt over whether the SCO Group actually hold the copyrights they claim to hold. It appears that you are trying to present a balanced report drawing from various sources, so I would encourage you to consider as well the legal actions of SCO with Novell concerning those copyrights.

In the same paragraph you go on to say, "Partly funded by a hefty Microsoft license payment, SCO leveled a multibillion-dollar suit against IBM, charging that Big Blue had fed SCO-copyrighted software into Linux." You probably should have included Sun Microsystems when mentioning hefty license payments to the SCO Group. It is also putting a lot of water under the bridge to simplify the lawsuit against IBM the way you do here. The SCO Group have been trying very hard in court to claim that it is a case about contracts rather than copyrights, while making statements to the press to the contrary. In combination with the earlier "held some potentially powerful copyrights" line, this is simply misleading for readers unfamiliar with the case.

"This triggered fear and loathing in the fast-growing Linux community." I feel it is a mischaracterization of the Linux community to make this statement. While there have been some outspoken individuals who support Linux and have made strong statements in opposition to the claims of the SCO Group, the community as a whole neither fears nor hates the SCO Group per se. It would be more accurate to say that this triggered a vigorous response in the Linux community, with many advocates questioning the basis for the claims of the SCO Group.

"A court win for SCO, Linux fans feared, could bring its growth to a grinding halt." Again, while there have been some who have speculated this, I think it is inappropriate to put it in the context you have chosen. There are, for instance, many Linux advocates who have stated that they want the SCO Group to specify their infringement claims so that the offending code can be removed to end the infringement. The notion that a win for SCO spells the end of Linux is not one that originates within the Linux community, and should certainly not be stated as though it is an accepted fact.

"And so, SCO became one of the most vilified companies in the technology industry." The SCO Group certainly will not win any popularity contests with advocates of open source software, and there have been a lot of criticisms leveled against them, but stating that they are vilified conveys the notion that it is somehow not justified. I find this sentence to be gratuitous and irrelevant to the article in general. It does not do anything to inform your readers, but rather inspires them to consider the SCO Group somewhat of a victim and the open source community somewhat of a bully. I expect better from a column labeled as "News Analysis".

It's really rather unfortunate that you started the article with such a poor footing, because the rest of the piece is very good. If not for the overdramatization in the opening and the paragraph I've referenced above, I would recommend your article to friends and associates wanting to know more about the SCO v. IBM lawsuit.